Capital Market Solicitors examine the listing initiative of the Exchange

February 23, 2012

The Capital Market Solicitors Association (CMSA) has taken an in-depth look at the various initiatives and issues on-going in the Nigerian Equity Market. Chiefly amongst the bone of contention is the compulsory listing of certain Oil and Gas companies and emphatically the Telecommunication companies.

President of the association, Barr. Babatunde Ajibade held in his address that the progressive initiatives at the Exchange requires the best of attention if Nigeria should optimize the best out of the schemes. Specifically, Ajibade says the listing of the Oil and Gas companies and the Telecoms will benefit Nigerians emphasized that it is necessary for the market players to be on the same page.

As part of discussion with the solicitors, the CEO of the Nigerian Stock Exchange (NSE) Oscar Onyema took time to clarify doubts on the issue of liquidity in the Nigerian economy. Onyema who described the matter “as a case of chicken and eggs situation” advised that the listing of companies in the bourse should not wait until a market is liquid. He revealed that 25% of the Pension Fund assets (worth N2.6 trillion) can be allocated to equities and 30% of same allotted to fixed income. The CEO pointed out that the Nigerian Capital Market is strong enough to absolve the targeted companies for compulsory listing as such will yield incentives.

Also, the CEO of Chapel Hill Denham Securities Limited, Chuka Chiemeka noted that while the Oil and Gas sector provides 79% of Nigeria’s GDP and continues to serve as a major contributor to the foreign reserve of the country, the telecoms industry, the fastest growing sector in Nigeria with a compounded growth rate of 36% superseding the country’s growth rate of 8% require representation in the nation’s Capital Market.

However, an analyst, Chidi Momah who presented his point of view at the forum critiqued the various concepts of the market raised for evaluation if a compulsory listing could be regarded as a form of expropriation. He commented on the phrase “compulsory listing” expressing fears as to the image and perception of the initiative on a country’s Capital Market.

While mediating on the issues surrounding the listing of the said companies, the National Assembly’s Capital Market Committee Chairman, Hon. Hembe Herman indicated that the phrase “compulsory listing” used in the description of the listing initiative “did not emanate from the lawmakers”, adding that “the legislators are concerned about an enabling environment for businesses to thrive and would rather work towards a situation where a combination of incentives and regulation is deployed to achieve the aim. Hon. Herman concluded that the passage of the bill on the listing of companies will soon be actualised.